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Topics: Contract, Contractual term, Contract law Pages: 14 (5532 words) Published: May 11, 2013
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Exclusion Clauses

1. Introduction
A clause which seeks to exclude or restrict liability for breach of contract, breach of implied terms or misrepresentation, in a contract that seeks to restrict the rights of the parties to the contract. Exclusion clauses are generally found in contracts. These types of clauses operate to exclude or restrict the rights of a party. For example, if a party to a contract wishes to limit its liability in the event that it breaches the contract, it will usually include an exclusion clause limiting the amount of damages that the other party can claim to a specified total. Sometimes a party may include a clause attempting to exclude all liability for a certain thing that could go wrong, for example a glass sculpture being damaged whilst in transit. Traditionally, the district courts have sought to limit the operation of exclusion clauses. In addition to numerous common law rules limiting their operation, in England and Wal Consumer Contracts Regulations 1999, the Unfair Contract Terms Act 1977 applies to all contracts, but the Unfair Terms in Consumer Contracts Regulations 1999, unlike the common law rules, do differentiate between contracts between businesses and contracts between business and consumer, so the law seems to explicitly recognize the greater possibility of exploitation of the consumer by businesses. The Unfair Contract Terms Act (UCTA) limits companies' ability to avoid liability in their contracts. UCTA is only concerned with exclusion clauses, and does not examine whether a contract is generally unfair. An 'exclusion clause' is not fully defined in UCTA, but can include any clause attempting to restrict or exclude liability, make a liability or the enforcement of a liability, subject to restrictive conditions, restrict the rights and remedies of the wronged party or restrict rules of evidence or procedure.

The natural of an exclusion clause is that an exclusion clause functions as a defence to an action for breach of contract. This view can only be justified by ignoring the exclusion clause when defining the obligations of the parties. A contracting party who wishes to include an exclusion clause in a contract and rely upon it must overcome three hurdles before he can do so. He must show: (i) That it is incorporated in the contract

(ii) That, as a matter of construction, it applies to cover the events which have arisen (iii) That it is valid under the Unfair Contract Terms Act 1977. Types of Exclusion Clause

True exclusion clause: The clause recognises a potential breach of contract, and then excuses liability for the breach. Alternatively, the clause is constructed in such a way it only includes reasonable care to perform duties on one of the parties. Limitation clause: The clause places a limit on the amount that can be claimed for a breach of contract, regardless of the actual loss. Time limitation: The clause states that an action for a claim must be commenced within a certain period of time or the cause of action becomes extinguished.

2 Exclusion Clauses: The Common Law
2.1 The incorporation of exclusion clauses
As with other contractual terms the first stage which must be overcome is to show that the exclusion clause has been incorporated into the contract. The rules are the same as those which apply to incorporation of all...
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